| Providence Wash. Ins. Co. v Munoz |
| 2011 NY Slip Op 05684 [85 AD3d 1142] |
| June 28, 2011 |
| Appellate Division, Second Department |
| Providence Washington Insurance Company, as Subrogee of ScottShelofsky et al., Appellant, v Bina E. Munoz et al., Respondents. (Action No. 1.)Rebecca Munoz, Plaintiff, v Scott E. Shelofsky et al., Defendants. (Action No. 2.) ProvidenceWashington Insurance Company, as Subrogee of Scott Shelofsky et al., Appellant, v Bina E.Munoz et al., Respondents. (Action No. 3.) |
—[*1] Bandel & Bandel, Garden City, N.Y. (Steven Bandel of counsel), for respondents.
In two related subrogation actions to recover insurance benefits paid to the plaintiff's insuredin actions Nos. 1 and 3 and a related action to recover damages for personal injuries (action No.2), the plaintiff in actions Nos. 1 and 3 appeals, as limited by its brief, from so much of an orderof the Supreme Court, Nassau County (Parga, J.), dated June 17, 2010, as denied that branch ofits motion which was, in effect, to dismiss the counterclaim asserted against it in action No. 3and, in effect, granted the cross motion of the defendants in actions Nos. 1 and 3 for an award ofcosts and an attorney's fee against it pursuant to CPLR 8303-a and 22 NYCRR 130-1.1.
Ordered that the order is reversed insofar as appealed from, on the law, on the facts, and inthe exercise of discretion, with costs, that branch of the motion of the plaintiff in actions Nos. 1and 3 which was, in effect, to dismiss the counterclaim asserted against it in action No. 3 isgranted, and the cross motion of the defendants in actions Nos. 1 and 3 for an award of costs andan attorney's fee against the plaintiff in actions Nos. 1 and 3 pursuant to CPLR 8303-a and 22NYCRR 130-1.1 is denied.
Allegedly, on June 8, 2003, a vehicle operated by Scott Shelofsky and owned by ScottShelofsky and/or Toni Ann Shelofsky (hereinafter together the Shelofskys) collided with avehicle operated by Rebecca E. Munoz and owned by Bina E. Munoz. Providence WashingtonInsurance Company (hereinafter Providence) paid the Shelofskys' insurance claim for damage totheir vehicle [*2]resulting from the collision, pursuant to aninsurance policy it had issued to them. Thereafter, Providence, as subrogee of the Shelofskys,commenced an action in the District Court, Nassau County, against Bina E. Munoz and RebeccaE. Munoz (hereinafter together the defendants) to recover the insurance benefits it paid to theShelofskys (hereinafter action No. 3). In their answer, the defendants interposed a counterclaimagainst Providence to recover damages for injury to property, alleging that damage to theirvehicle was caused by Scott Shelofsky's negligent operation of the Shelofsky vehicle. Providencethen commenced a second subrogation action against the defendants in the Supreme Court,Nassau County, this time to recover certain no-fault and uninsured motorist benefits it had paidto the Shelofskys (hereinafter action No. 1).
In an order dated June 25, 2007, the Supreme Court transferred action No. 3 from the DistrictCourt to the Supreme Court and joined actions Nos. 1 and 3 for purposes of trial, together with arelated personal injury action commenced by Rebecca Munoz against the Shelofskys inconnection with the same collision (hereinafter action No. 2). Thereafter, Providence movedpursuant to CPLR 3217 (b) to voluntarily discontinue its causes of action in actions Nos. 1 and 3and, in effect, to dismiss the defendants' counterclaim asserted against it in action No. 3.Providence contended that because a counterclaim in a subrogation action may be employed onlyto assert a set-off against the subrogee's claim, the voluntary discontinuance of its causes ofaction warranted dismissal of the counterclaim in action No. 3. The defendants cross-moved foran award of costs and an attorney's fee against Providence pursuant to CPLR 8303-a and 22NYCRR 130-1.1. The Supreme Court granted that branch of Providence's motion which was tovoluntarily discontinue its causes of action in actions Nos. 1 and 3, but denied that branch ofProvidence's motion which was, in effect, to dismiss the defendants' counterclaim assertedagainst it in action No. 3 and, in effect, granted the defendants' cross motion. We reverse theorder insofar as appealed from.
Contrary to the defendants' contention, their counterclaim against Providence in action No. 3"cannot effect an affirmative recovery against [Providence], but rather may be maintained. . . only to the extent of setting off [Providence]'s claim" (Peerless Ins. Co. v Michael Beshara,Inc., 75 AD3d 733, 736 [2010]; see Allstate Ins. Co. v Babylon ChryslerPlymouth, 45 AD2d 969 [1974]; U.S. Underwriters Ins. Co. v Greenwald, 31 Misc3d 1206[A], 2010 NY Slip Op 52394[U] [2010], affd 82 AD3d 411 [2011]).Accordingly, the Supreme Court, upon granting that branch of Providence's motion which was tovoluntarily discontinue its causes of action in action Nos. 1 and 3, also should have granted thatbranch of Providence's motion which was, in effect, to dismiss the defendants' counterclaimasserted against it in action No. 3.
Moreover, the Supreme Court improvidently exercised its discretion in granting thedefendants' cross motion for an award of costs and an attorney's fee against Providence pursuantto CPLR 8303-a and 22 NYCRR 130-1.1. The defendants failed to demonstrate that Providence'sconduct was frivolous within the meaning of 22 NYCRR 130-1.1 (c), or that its actions werecommenced or continued in bad faith (see CPLR 8303-a [c] [i]; Broich v Nabisco, Inc., 2 AD3d474, 475 [2003]; Karnes v City of White Plains, 237 AD2d 574, 576 [1997]). Wenote that the Supreme Court did not follow the proper procedure for imposing costs and anattorney's fee, since it failed to specify in a written decision the conduct upon which the awardwas based and the reasons why it found the conduct to be frivolous (see 22 NYCRR130-1.2; Badillo v Badillo, 62AD3d 635, 636 [2009]; Hamilton vCordero, 10 AD3d 702, 703 [2004]). Dillon, J.P., Covello, Chambers and Roman, JJ.,concur.